"Win the race against trolls": the trademark implications of Trump’s Cuba policy reversal 19 Jun 17

Trevor Little

On Friday, President Trump unveiled his plans to re-adjust the policy of the United States towards Cuba, announced that he was “cancelling the last administration’s completely one-sided deal” with the country. The move has implications for trademark owners, although in many respects overall strategies shouldn’t change – not least when companies are faced with third parties seeking to register their brands.

The National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba requires the Secretary of State to “identify the entities or sub-entities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel”, with direct financial transactions with these to be prohibited (with some exceptions). Within 30 days a process to adjust regulations to ensure adherence to the statutory ban on tourism to Cuba will also be initiated.

When President Obama ordered the restoration of full diplomatic relations with Cuba in December 2014, there were a number of dimensions for the trademark community to consider – both in terms of the prospect of the Cuban market opening up to US brands, and the possibility that Cuban companies may soon be able to target the lucrative US market. This latest policy announcement has implications for both, and brand owners should ensure that the right strategies are being implemented. 

First, the prospect of US companies doing increased business in Cuba in the near future has been impacted. However, the ability to register marks in the jurisdiction continues and David K Friedland, partner at Friedland Vining, tells World Trademark Review that this should continue to be a focus: “Based on the changed policy, there is no reason for US brand owners to stop the process of seeking Cuban registrations. The new policy does still appear to permit brand owners to register their marks in Cuba, notwithstanding that the ability to enter the Cuban market has been somewhat restricted under the new policy. So US brand owners should definitely continue to seek registrations in anticipation of the market fully opening in the future. Given that judicial and administrative precedent shows that brand owners may register their marks without establishing use in Cuba (in the Kool-Aid case, a Cuban court excused non-use of a US brand in Cuba on the basis of the embargo), there is no real downside to doing so at this time.”

Aside from preparing for possible future market entry, registrations could also serve a defensive purpose. In issue 57 of World Trademark Review, Jaime Angeles, partner at AngelesPons, reflected on a rush of Cuban applications for well-known US trademarks (including for such brands as Chase and the NFL) following Obama’s 2014 policy shift. Reflecting on the situation now, he notes: “The number of trollers has been almost non-existence in recent months, but it is still a risky business to leave the door open.”

Friedland concurs, adding: “Avoiding the ‘troll’ issue is among the top reasons for brand owners to register their marks in Cuba, a first-to-file jurisdiction. By registering their marks now, they can (hopefully) win the race against trolls who are registering well-known, famous brands at an alarming pace in Cuba. As I mentioned, Cuban courts have excused non-use of a mark due to the US embargo, so cancellation on that basis remains unlikely. Furthermore, although Cuba is a signatory to the Pan-American convention, it still remains to be seen whether the trademark office and/or courts will honour a decision against a troll who registers a well-known brand in the hope of scoring a big payday down the road.”

In terms of the real-world impact on those brands that have made in-roads into the Cuban market, it remains a case of ‘wait and see’. Angeles suggests, for example, that “the hotel industry will have to take close look on the way to conduct business in Cuba”. Marriot International, for example, announced it would enter the Cuban market last year, shortly after Starwood Hotels and Resorts announced it had signed three hotel deals in the country – making it the first US hotel company to do so in 60 years. CNN also reports that the Four Points by Sheraton Havana is operated by Cuba’s Armed Forces Business Enterprises Group (GAESA), which is – according to a senior administration official – to be included on the prohibited entities list. Writing in The Atlantic, J Weston Phippen says that the policy “is expected to make an exception for US companies already doing business with GAESA, so flights, cruises, and already-scheduled hotel deals will likely be exempt”. What will be all-important is the precise detail behind the policy, which will become clearer over the next 30 days.

For Cuban brands eyeing the US market, nothing has effectively changed over the weekend. While Friday’s announcement makes the prospect of free trade seem some way off, it was never imminent and the trademark challenges that existed last week will continue. For example, while Obama’s thawing of relations intensified the legal and political row over ownership of the HAVANA CLUB mark, that dispute has lasted decades and will rumble on still. Similarly, whenever the embargo is finally lifted, Cuban organisations that have seen other companies commercialise their brand names (such as non-Cuban versions of cigars with identical names sold in the United States) will have similar battles to face. Friedland comments: “The trademark debate still will require some sort of government intervention to decide the ongoing (for decades) disputes related to the HAVANA CLUB rum mark, as well as various cigar brands that carry registrations for both the Cuban and non-Cuban versions of cigars bearing the same name. The USPTO and various courts have been juggling these issues for decades and, when the embargo finally ends and the market is ready to welcome competing brands with the same name, some sort of policy change will need to be enacted in order to protect the consumers of these brands.”

Trump’s latest announcement does not roll back Obama’s Cuba policy stance in its entirety, with the embassies in Washington and Havana, as well as diplomatic relations between the countries, remaining open. Similarly, the immediate impact on trademarks is arguably not world-changing. The arguments for registering marks remain valid, while Cuban products (aside from those taken out of the country for personal use) remain blocked from the US market. However, the policy change does provide a timely reminder to review portfolios and strategies to ensure that brands are properly protected.

Managing portfolio risks and challenges emanating from the political environment – including Cuba – is a focus at this year’s Managing Trademark Assets, held in Chicago on October 17. For more information, visit the event website here.